Inventory inaccuracy is one of the most important things for any warehouse. If left unchecked, inventory inaccuracy can lead to a negative cycle of declining productivity and increasingly poor data.
Walking through a warehouse, I noticed stickers on the products and I asked what they were for. The response was that “these were used for stock take”, While this isn't a completely foreign concept to me, it made me think which led to the following discussion:
In another facility we visited the bulk locations were tracked as a single location in their “system”. The process of counting and monitoring inventory involved a complex procedure of taking infrequently (i.e. they were updated when there was time) updated count sheets and entering them into excel. Problem here was that facility was continually working (processing around 850 orders per day) so they stood no chance of maintaining any real time level of accuracy. To further compound their challenges the products in the facility had quite strict expiry dates and were reasonably high value items.
This resulted in annual inventory write downs of in expired stock of +/- R3,000,000!!
If left unchecked, inventory inaccuracy can lead to a negative cycle of declining productivity and increasing inaccuracies.
High inventory levels because you need the extra safety stock to hide the inaccuracies
Inefficient warehouse usage when you need to stop warehouse operations to carry a physical count in order to satisfy auditing requirements
The following steps can assist in improving accuracy:
Cycle counting a great way to gradually improve inventory accuracy. While eliminating yearly physical count is a great goal, it can only be achieved when the warehouse has reached a certain threshold of inventory accuracy. A key point here is to determine which items need to be counted more frequently and build your plan that procedures around that.
The warehouse workers should be familiar with the procedure when an exception occurs e.g. if a product is not found as suggested by the system or damaged, the operator should know how to log exception and follow the steps.
Analyse exceptions and found out why these exceptions are occurring. Are more exceptions being recorded for certain items or certain employees? Why? If a shipment of wrong product was detected, where did that pick come from and was the inventory corrected for the original item? Was wrong putaway the cause for a pick exception?
To potentially avoid picking the wrong items, make sure that items similar in appearance are stored apart from each other. Having multiple items in the same location is also a recipe for shipping inaccuracy. You should also ensure that locations are properly labeled and physically
Although this can initially seem time consuming checks such as counting each item at receiving from “problem” suppliers, weighing on outbound, full outbound QA on each pick or if you have a WMS SKU, location and quantity validation will prove to be life savers in the long run.
Once again if you have a WMS I think check digits are really great! They force your operators to confirm the location that they are performing their work at as they don't know what the validation ID is until they are physically at the location.
Setting baseline, achievable metrics helps everyone understand the end goal.
Measuring your warehouse efficiency and productivity is crucial to achieving your business goals. Here’s how you can make sure you’re measuring the metrics that matter. Read our article on what to measure in your warehouse and discover the key KPIs for your warehouse.
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